Starbucks Fights to Keep up with McDonalds
Starbucks is known world-wide for having outrageously expensive drink prices, but all that could change now that competitors like McDonald's are offering cheaper Joe, including specialty espresso drinks like cappuccinos and lattes.
Seattle-based locations are going to be experimenting with $1 coffees and free refills in a vie to win over frugal customers. Before the promotion, Starbucks was selling black coffees for up to $2.10 US, so this is quite a price difference! With the tested project, a short coffee, or 8oz (237 ml) will cost $1.
A statement from a Starbucks spokeswoman said the test "is not indicative of any new business strategy," adding, "Testing is a way of life for us, as we are constantly looking for new ways to connect with the customer and provide the best Starbucks experience."
McDonalds clearly has them nervous, and rightly so. There are 15,000 Starbucks locations in 43 counties, and McDonalds, which is found in many more locations all over the world, is already adding these new specialty coffees to about 14,000 stores!
Great, $1 coffee is fantastic, and I won't be complaining, but the real problem is in the specialty drinks. Afterall, that's the reason people opt for Starbucks in the first place. If they continue to keep prices as high on cappuccinos, lattes, and the ever-popular Frappucino, what will keep customers from going to McDonalds or Tim Hortons for their sweetened, slushy, iced java?
Seattle-based locations are going to be experimenting with $1 coffees and free refills in a vie to win over frugal customers. Before the promotion, Starbucks was selling black coffees for up to $2.10 US, so this is quite a price difference! With the tested project, a short coffee, or 8oz (237 ml) will cost $1.
A statement from a Starbucks spokeswoman said the test "is not indicative of any new business strategy," adding, "Testing is a way of life for us, as we are constantly looking for new ways to connect with the customer and provide the best Starbucks experience."
McDonalds clearly has them nervous, and rightly so. There are 15,000 Starbucks locations in 43 counties, and McDonalds, which is found in many more locations all over the world, is already adding these new specialty coffees to about 14,000 stores!
Great, $1 coffee is fantastic, and I won't be complaining, but the real problem is in the specialty drinks. Afterall, that's the reason people opt for Starbucks in the first place. If they continue to keep prices as high on cappuccinos, lattes, and the ever-popular Frappucino, what will keep customers from going to McDonalds or Tim Hortons for their sweetened, slushy, iced java?
Trend Themes
1. Cheaper Specialty Drinks - Starbucks needs to find a way to lower the prices of their specialty espresso drinks, like cappuccinos and lattes, to compete with McDonald's and other competitors.
2. Frugal Customer Strategy - By experimenting with $1 coffees and free refills, Starbucks is trying to win over frugal customers and retain their loyalty.
3. Constant Testing for Improvement - Starbucks views testing as a way of life to constantly find new ways to connect with customers and provide the best Starbucks experience.
Industry Implications
1. Coffee Retail - The coffee retail industry needs to innovate and adapt to changing customer preferences and competition from fast-food chains like McDonald's.
2. Fast Food - The fast food industry, specifically chains like McDonald's and Tim Hortons, can capitalize on the opportunity to attract customers with cheaper specialty coffee drinks and drive sales.
3. Food and Beverage Retail - The food and beverage retail industry should explore disruptive strategies to keep up with changing customer demands and preferences, as demonstrated by Starbucks' experimentation with lower prices and free refills.
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